NATIONAL DEVELOPMENT BANK PLC INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

Transcription

1 NATIONAL DEVELOPMENT BANK PLC INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE August 2015

2 Chairman s Message Financial Performance H National Development Bank PLC

3 Performance Commentary H National Development Bank PLC Dear Stakeholders The banking industry remains challenging with credit growth slower than anticipated and severe competition posed by a large number of banking and non-banking institutions. The macro-economic outlook also carries uncertainty with the parliamentary elections scheduled to be held in August Despite such factors, National Development Bank PLC (NDB) is well focused on its strategy for the remainder of the year in achieving its targets and generating sustainable returns to all its stakeholders. Given below is an analysis of the financial performance of the NDB Bank and Group for the first half of 2015, amidst such macro-economic backdrop. The Bank recorded a PAT of LKR 2 billion for the first half of 2015, which was a 7% Year-on-Year (YoY) growth as compared to 30 June Total operating income of the Bank grew by 5% during the period under review, compared to H1 2014, to reach LKR 6,241 million. Net Interest Income (NII) declined marginally by 3% due to the relatively low credit growth environment which prevailed in the country. Net fee and commission income which is a primary contributor towards core-banking operations increased by 12% compared to the prior period. The Bank s Other operating income also increased by LKR 602 million, to reach LKR 1,044 million for the period, which included equity income of LKR 965 million as compared with LKR 431 million for the prior period. At a Group level, total operating income declined marginally by 3% to reach LKR 6,136 million. The decrease was primarily due to the reduction in Net gains from NDB Group s total financial investments portfolio. However, NDB Group s Net fee and commission income recorded a significant growth of 28% over the prior period due to the increased performance of the fee based Group Companies. The Bank s Impairment charges for loans and other losses for the first six months of 2015 was LKR 198 million, compared to LKR 222 million of 2014, a reduction of LKR 24 million which was primarily due to the improved quality of the Bank s loan portfolio. Total operating expenses grew by 16%, an increase of LKR 411 million compared to the prior period. The main cost driver during the period under review was 9 new branches which were added to the Bank s branch network. At a Group level, the operating expenses of LKR 3,280 million grew by 18% over the first half of NDB Group continues to strive in its cost management initiatives, ensuring that the Group maintains an optimum Cost to income ratio which in turn will ensure higher returns to its shareholders. The Bank s Balance Sheet recorded moderate growth during the first six months of the year, with Total assets growing at 3%. Loans and receivables to customers grew at the same pace of 3%, reflecting the slow credit growth experienced across the banking industry. The Non-performing loan ratio (NPL) of the Bank for the six months ended 30 June 2015 was 2.64%, still one of the best NPL ratios in the industry and compares with an industry average of 4.5% (as at April 2015). 2

4 Performance Commentary H National Development Bank PLC Customer deposits recorded a 12% growth compared to the year ended 31 December The Bank issued and placed listed rated unsecured subordinated redeemable debentures of LKR 10 billion with a maturity period of 5 years during the second quarter of The Bank continues to remain well capitalized with a 10.12% Tier I capital adequacy ratio and a 14.69% Total capital adequacy ratio, well above the minimum statutory requirement. Earnings per Share (EPS) for the period under review was LKR The share price of the Bank closed at LKR on 30 June 2015, with a resultant PE ratio of (times). NDB remains focused in generating the highest returns to its shareholders for their commitment and confidence placed in NDB. NDB has experienced considerable improvement in its share in the market over the past few years, and will continue to grow its share through competitive and innovative product offerings and excellent customer service. (Sgd.) N G Wickremeratne Chairman 13 August

5 STATEMENT OF PROFIT OR LOSS Bank Group Six months Six months Quarter Quarter Six months Six months Quarter Quarter ended ended ended ended ended ended ended ended 30/06/ /06/2014 Change 30/06/ /06/ /06/ /06/2014 Change 30/06/ /06/2014 LKR '000 LKR '000 % LKR '000 LKR '000 LKR '000 LKR '000 % LKR '000 LKR '000 Gross Income 12,758,678 12,469, ,934,841 6,137,485 12,642,921 12,778,454 (1) 6,323,380 6,308,061 Interest Income 10,179,606 10,281,201 (1) 5,066,545 5,238,488 10,309,865 10,376,265 (1) 5,148,181 5,272,327 Interest Expenses 6,517,479 6,512, ,324,631 3,265,299 6,506,744 6,479, ,328,851 3,238,896 Net Interest Income 3,662,128 3,769,020 (3) 1,741,914 1,973,189 3,803,122 3,896,390 (2) 1,819,330 2,033,431 Net Fee and Commission Income 932, , , ,179 1,462,454 1,145, , ,402 Net gain/(loss) from trading 467, ,537 (10) 259, , , ,537 (10) 259, ,607 Net gain/(loss) from financial investments 135, ,796 (66) 46,062 97, , ,172 (64) 136, ,465 Other operating income 1,043, , , , ,890 37, , Total Operating Income 6,241,199 5,957, ,610,210 2,872,186 6,136,177 6,298,579 (3) 2,994,528 3,069,165 Impairment charges for loans and other losses Individual Impairment 175, ,863 (22) 55, , , ,863 (22) 55, ,706 Collective Impairment 23,041 (3,737) (717) 206,133 (37,164) 23,041 (3,737) (717) 206,133 (37,164) Other provision ,092 19,322 (2,157) (996) 19,322 (2,157) 198, ,126 (11) 261, , , ,969 (1) 281,121 94,385 Net operating income 6,042,902 5,735, ,348,411 2,678,552 5,918,558 6,078,610 (3) 2,713,407 2,974,780 Operating Expenses Personnel Expenses 1,652,891 1,438, , ,736 1,813,054 1,564, , ,851 Depreciation and amortization 180, , ,516 78, , , ,922 89,540 Other Expenses 1,115, , , ,281 1,262,681 1,042, , ,064 Total operating expenses 2,948,762 2,537, ,543,338 1,229,405 3,280,278 2,782, ,718,962 1,349,455 Operating Profit Before Tax on Financial Services 3,094,140 3,197,480 (3) 805,073 1,449,147 2,638,281 3,296,001 (20) 994,446 1,625,325 Tax on Financial Services (497,530) (518,627) (4) (169,530) (289,627) (497,530) (518,627) (4) (169,530) (289,627) Operating Profit After Tax on Financial Services 2,596,611 2,678,853 (3) 635,543 1,159,520 2,140,752 2,777,374 (23) 824,915 1,335,698 Share of associate companies' profits/(losses) ,920 97,274 (35) 15,957 - Profit Before Taxation 2,596,611 2,678,853 (3) 635,543 1,159,520 2,203,672 2,874,648 (23) 840,873 1,335,698 Taxation (593,600) (800,007) (26) (190,106) (479,507) (730,562) (817,049) (11) (257,357) (482,969) Profit for the Period 2,003,011 1,878, , ,013 1,473,110 2,057,599 (28) 583, ,729 Profit Attributable to: Equity Holders of the parent 2,003,011 1,878, , ,013 1,443,806 2,033,930 (29) 574, ,043 Non Controlling Interests ,304 23, ,985 9,686 2,003,011 1,878, , ,013 1,473,110 2,057,599 (28) 583, ,729 Basic Earnings per share (in LKR) (31) Diluted Earnings per share (in LKR) (31) STATEMENT OF COMPREHENSIVE INCOME Six months Six months Quarter Quarter Six months Six months Quarter Quarter ended ended ended ended ended ended ended ended 30/06/ /06/2014 Change 30/06/ /06/ /06/ /06/2014 Change 30/06/ /06/2014 LKR '000 LKR '000 % LKR '000 LKR '000 LKR '000 LKR '000 % LKR '000 LKR '000 Profit for the period 2,003,011 1,878, , ,013 1,473,110 2,057,599 (28) 583, , Other comprehensive income /(expenses) to be reclassified to profit or loss in subsequent period Exchange differences on translation of foreign operations ,080 (321) 4,798 14,624 (20) Gains from Available for Sale Investments (85,814) (85,205) (1) 228,141 59,545 (80,706) (85,205) (5) 232,800 58,545 Gains and losses on cash flow hedges 80,469 (65,108) 224 (184,795) (65,108) 80,469 (65,108) 224 (184,795) (65,108) Total Other Comprehensive Income /(expenses) (5,345) (150,313) 96 43,346 (150,313) 14,843 (150,634) ,630 (6,583) Less : Tax expenses relating to components of other comprehensive Income 21,722 23,852 (9) (66,575) (16,678) 21,722 23,852 (9) (66,575) (16,678) Total Other Comprehensive Income after Tax 16,377 (126,461) 113 (23,229) (22,241) 36,565 (126,782) 129 (3,945) (23,261) Total Comprehensive Income for the period 2,019,388 1,752, , ,772 1,509,676 1,930,817 (22) 579, ,468 Attributable to: Equity holders of the parent 2,019,388 1,752, , ,772 1,476,432 1,907,177 (23) 566, ,787 Non Controlling Interests ,244 23, ,823 9,681 2,019,388 1,752, , ,772 1,509,676 1,930,817 (22) 579, ,468 NATIONAL DEVELOPMENT BANK PLC 1

6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION BANK Group Current Period Previous Period Current Period Previous Period As at As at As at As at 30/06/ /12/2014 Change 30/06/ /12/2014 Change (Audited) (Audited) LKR '000 LKR '000 % LKR '000 LKR '000 % Assets Cash and cash equivalents 7,475,699 3,104, ,667,799 3,274, Balances with Central Bank 7,147,163 6,740, ,147,163 6,740,590 6 Placements with banks 7,788,743 2,721, ,788,743 2,721, Derivative Financial Instruments 1,804,887 1,903,781 (5) 1,804,887 1,903,781 (5) Financial Assets - Held for trading 6,921,455 2,785, ,787,497 6,028, Loans and Receivables to banks 195, ,144 (37) 195, ,144 (37) Loans and Receivables to other customers 181,239, ,175, ,273, ,235,906 3 Financial Investments - Loans and receivables 24,647,898 38,302,428 (36) 25,376,976 38,683,476 (34) Financial Investments - Available for sale 20,833,144 17,060, ,100,925 18,057, Financial Investments - Held to maturity 6,938,774 8,970,963 (23) 8,154,127 10,167,325 (20) Investments -Held for sale 18,526 18, ,302 33,301 0 Investments in subsidiary companies 2,054,238 2,000, Investments in associate companies , Investment Property ,545,693 1,545,693 - Intangible assets 236, ,132 (7) 344, , Property, plant & equipment 1,955,483 1,927, ,208,439 2,252,647 (2) Other assets 1,670,784 1,453, ,619,116 1,876,335 (14) Total assets 270,928, ,729, ,841, ,129,605 3 Liabilities Due to Banks 954,849 7,029,342 (86) 954,849 7,029,342 (86) Derivative Financial Instruments 303, ,186 (54) 303, ,186 (54) Due to other Customers 170,094, ,823, ,721, ,485, Debt Securities issued and other borrowed funds 48,444,968 61,955,460 (22) 48,414,969 61,925,802 (22) Current Tax Liabilities 718, ,687 (13) 727, ,220 (10) Deferred Tax 862, , , , Other liabilities 5,644,033 6,372,229 (11) 5,957,526 6,610,634 (10) Dividends payable 46,574 51,429 (9) 46,574 51,429 (9) Subordinated Term Debts 20,248,531 11,149, ,248,531 11,149, Total liabilities 247,318, ,490, ,228, ,331,186 3 Equity Stated Capital (Bank - 165,167,342 shares & Group - 164,674,334 shares) 1,243,437 1,225, ,163,628 1,145,353 2 Statutory Reserve Fund 1,010,785 1,010,785 (0) 1,010,785 1,010,785 (0) Retained Earnings 19,969,176 18,625, ,007,828 24,245,824 3 Other Reserves 1,386,860 1,376, ,502,279 1,473,811 2 Total shareholders' equity 23,610,258 22,238, ,684,521 27,875,773 3 Non Controlling Interests , ,646 1 Total Equity 23,610,258 22,238, ,612,210 28,798,419 3 Total liabilities and equity 270,928, ,729, ,841, ,129,605 3 Net Book Value Per Share (LKR) Contingent liabilities and commitments 228,401, ,143,633 (1) 228,401, ,148,862 (1) Memorandum Information Number of Employees 1,807 1,744 Number of Branches NATIONAL DEVELOPMENT BANK PLC 2

7 for the period ended 30 June Stated Capital Statutory Reserve Fund General Reserve Revaluation Reserve STATEMENT OF CHANGES IN EQUITY Reserves Investment Fund Share Based Account Payment Reserves Available For Sale Reserves Cash Flow Hedge Reserve Retained Earnings LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 Total Non Controlling Interests Total Equity BANK Balance as at 1 January ,172, ,527 5,805,707-1,706,751 22, ,669-9,847,553 19,620,478-19,620,478 Total Comprehensive Income for the period Profit for the period ,878,846 1,878,846-1,878,846 Other Comprehensive Income net of Tax (61,353) (65,108) - (126,461) (126,461) Total Comprehensive Income for the period (61,353) (65,108) 1,878,846 1,752,385-1,752,385 Transactions with equity holders Issue of Shares 38, ,658-38,658 Transfer to Investment Fund Account , (124,983) Fair value of share options (2,124) (2,124) - (2,124) Dividend to equity holders (821,946) (821,946) - (821,946) Balance as at 30 June ,211, ,527 5,805,707-1,831,734 20,243 45,316 (65,108) 10,779,470 20,587,451-20,587,451 Balance as at 1 January ,225,162 1,010,785 5,805, ,456-20, , ,852 12,819,737 22,238,192-22,238,192 Total Comprehensive Income for the period Profit for the period ,003,011 2,003,011-2,003,011 Other Comprehensive Income before Tax (85,814) 80,469 - (5,345) - (5,345) Tax on Other Comprehensive Income , ,722-21,722 Total Comprehensive Income for the period (64,092) 80,469 2,003,011 2,019,388-2,019,388 Transactions with equity holders Issue of Shares 11, ,957-11,957 Transfer from share based payment reserves 6, (6,318) Dividend paid (659,278) (659,278) - (659,278) Balance as at 30 June ,243,437 1,010,785 5,805, ,456-13,925 41, ,321 14,163,470 23,610,258-23,610,258 NATIONAL DEVELOPMENT BANK PLC 3

8 for the period ended 30 June Stated Capital Statutory Reserve Fund General Reserve Revaluation Reserve STATEMENT OF CHANGES IN EQUITY Reserves Investment Fund Share Based Account Payment Reserves Available For Sale Reserves Cash Flow Hedge Reserve Retained Earnings LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 Total Non Controlling Interests Total Equity GROUP Balance as at 1 January , ,527 5,805,707-1,706,751 22, ,614-14,926,095 24,513, ,846 25,361,653 Total Comprehensive Income for the period Profit for the period ,033,930 2,033,930 23,669 2,057,599 Other Comprehensive Income net of Tax (61,353) (65,108) (292) (126,753) (29) (126,782) Total Comprehensive Income for the period ,367 (61,353) (65,108) 2,033,638 1,907,177 23,640 1,930,817 Transactions with equity holders Issue of Shares 38, ,658-38,658 Transfer to Investment Fund Account , (124,983) Adjustment to share based payment reserves (79,809) , (55,330) - (55,330) Transfer to statutory reserve fund Dividend paid (821,946) (821,946) (37,279) (859,225) Balance as at 30 June , ,527 5,805,707-1,831,734 46,846 89,261 (65,108) 16,012,804 25,582, ,207 26,416,573 Balance as at 1 January ,145,353 1,010,785 5,805, ,456-60, , ,852 18,440,117 27,875, ,646 28,798,419 Total Comprehensive Income for the period Profit for the period ,443,806 1,443,806 29,304 1,473,110 Other Comprehensive Income before Tax (80,706) 80,469 11,140 10,903 3,940 14,843 Tax on Other Comprehensive Income , ,722-21,722 Total Comprehensive Income for the period - (58,984) 80,469 1,454,946 1,476,432 33,244 1,509,675 Transactions with equity holders Issue of Shares 11, ,957-11,957 Adjustment due to changes in group companies (33,665) (33,665) 13,083 (20,582) Transfer from share based payment reserves 6, (6,318) Adjustment to share based payment reserves , ,301-13,301 Dividend paid (659,278) (659,278) (41,283) (700,561) Balance as at 30 June ,163,629 1,010,785 5,805, ,456-67, , ,321 19,202,121 28,684, ,690 29,612,210 NATIONAL DEVELOPMENT BANK PLC 4

9 STATEMENT OF CASH FLOW BANK GROUP For the Period ended 30 June LKR '000 LKR '000 LKR '000 LKR '000 CASH FLOWS FROM OPERATING ACTIVITIES Interest received 10,041,019 10,281,201 10,137,717 10,396,115 Fee based income received 932, ,986 1,205,605 1,079,583 Dividend income received 407, ,119 85,413 29,798 Other income received 583, , , ,118 Interest paid (6,035,350) (6,512,181) (6,036,843) (6,512,460) Personnel costs paid (1,573,391) (1,391,585) (1,723,846) (1,391,585) General expenses paid (1,219,948) (1,000,173) (1,377,281) (1,041,746) Operating Profit before changes in operating assets and liabilities 3,136,319 3,279,929 2,879,546 3,294,822 Net increase in loans and advances (5,933,292) (16,502,500) (5,933,292) (16,502,500) Net Increase in deposits from customers 18,320,684 9,670,458 18,320,684 9,670,458 Net (increase)/decrease in other receivables 553,981 (74,617) 412, ,821 Net increase/(decrease) in other liabilities (1,020,153) 943,175 (864,165) 516,458 Net cash inflow/(outflow) from operating activities before taxation 15,057,539 (2,683,555) 14,815,622 (2,625,941) Financial Services VAT paid (542,941) (499,708) (542,941) (499,708) Income taxes paid (436,668) (322,498) (447,319) (345,337) Net cash provided by/(used in) operating activities 14,077,930 (3,505,762) 13,825,362 (3,470,986) CASH FLOWS FROM INVESTING ACTIVITIES Net changes in financial Investments 7,618,391 (14,754,972) 7,746,438 (14,424,133) Disposal of subsidiaries/associates (53,947) 139, Expenditure on property, plant & equipment (225,013) (104,735) (226,820) (151,083) Proceeds from sale of property, plant & equipment 97,017 14, ,338 14,313 Net cash used in investing activities 7,436,448 (14,705,825) 7,628,956 (14,560,903) CASH FLOWS FROM FINANCING ACTIVITIES Issue of shares 11,957 38,658 95,520 38,658 (Decrease)/ Increase in other borrowings (10,886,101) 19,823,221 (10,886,101) 19,823,221 Dividends paid to non controlling interests - - (1,046) (42,161) Dividends paid to shareholders of the parent Company (664,132) (823,175) (664,132) (823,175) Net cash provided by /(used in) financing activities (11,538,276) 19,038,704 (11,455,759) 18,996,543 NET INCREASE IN CASH AND CASH EQUIVALENTS 9,976, ,117 9,998, ,655 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 12,431,750 8,080,826 12,601,395 8,138,013 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 22,407,852 8,907,943 22,599,954 9,102,668 RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash and cash equivalents 7,475,699 2,873,613 7,667,799 3,068,338 Balances with Central Bank 7,147,163 6,288,655 7,147,163 6,288,655 Placements with banks 7,788,743-7,788,743-22,411,605 9,162,268 22,603,705 9,356,993 Amount due to foreign Banks 3, ,325 3, ,325 22,407,853 8,907,943 22,599,954 9,102,668 NATIONAL DEVELOPMENT BANK PLC 5

10 SEGMENTAL ANALYSIS- GROUP For the period ended 30 June Banking Capital Markets Property Investment Others Consolidated LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 LKR '000 Revenue Interest Income 10,179,606 10,216, , , ,309,865 10,352,592 Net Fee & commission income 932, , , ,342 39,595 31,605 56,440-1,438,441 1,145,933 Foreign exchange profit 467, , , ,537 Other Income 283, , ,760 37, , ,347 Total revenue from external customers 11,863,753 12,238, , ,445 39,595 31,605 56,440-12,613,492 12,725,409 Inter-segment Revenue - - 5,416 27,272 24,013 25, ,429 53,046 Total Revenue 11,863,753 12,238, , ,717 63,608 57,379 56,440-12,642,921 12,778,455 Impairment (charge )/reversal for loans & other losses (198,297) (222,126) (19,322) 2, (217,619) (219,969) Segment expenses (9,474,828) (9,015,519) (299,596) (233,414) (12,598) (13,552) - - (9,787,021) (9,262,485) Total segment expenses (9,673,124) (9,237,645) (318,918) (231,257) (12,598) (13,552) - - (10,004,640) (9,482,454) Segment results 2,190,629 3,000, , ,460 51,010 43,827 56,440-2,638,281 3,296,001 Share of associate companies' profit before taxation ,920 97,274 62,920 97,274 Taxation (730,562) (817,049) VAT on financial services (497,530) (518,627) Profit after taxation 1,473,109 2,057,599 Other information Segment assets 270,337, ,266,183 4,024,419 4,312,278 1,594,131 1,422,427 58, ,015, ,000,888 Investment in associates , , , ,827 Investments -Held for sale ,301-33,301 - Consolidated total assets 276,841, ,174,715 Segment liabilities 246,908, ,450, , ,264 91,543 83,151 8, ,228, ,758,142 Consolidated total liabilities 247,228, ,758,142 Segmental Cash flows Cash flows from operating activities 14,077,930 (3,505,762) (326,269) (309,949) 62,404 96,879 11, ,844 13,825,362 (3,470,988) Cash flows from investing activities 7,436,448 (14,705,825) 193, ,196 (583) (60,097) (163) (66,176) 7,628,956 (14,560,902) Cash flows from financing activities (11,538,276) 19,038,704 (1,046) (60,087) - (36,779) 83,563 54,705 (11,455,759) 18,996,543 NATIONAL DEVELOPMENT BANK PLC 6

11 MEASUREMENT OF FINANCIAL INSTRUMENTS AS AT 30 JUNE BANK (LKR'000) Held for Held to Maturity Loans and Available for Others Held for sale Total ASSETS Trading Receivables Sale Cash and cash equivalents - - 7,475, ,475,699 Balances with Central Bank - - 7,147, ,147,163 Placements with banks - - 7,788, ,788,743 Derivative Financial Instruments 1,804, ,804,887 Financial Assets - Held for trading 6,921, ,921,455 Loans and Receivables to banks , ,755 Loans and Receivables to other customers ,239, ,239,873 Financial Investments - Loans and receivables ,647, ,647,898 Financial Investments - Available for sale ,833, ,833,144 Financial Investments - Held to maturity - 6,938, ,938,774 Total Financial Assets 8,726,342 6,938, ,495,131 20,833, ,993,391 Investments -Held for sale ,526 18,526 Investments in subsidiary companies ,054,238-2,054,238 Intangible assets , ,334 Property, plant & equipment ,955,483-1,955,483 Other assets ,670,785-1,670,785 Total assets 8,726,342 6,938, ,495,131 20,833,144 5,916,840 18, ,928,756 Held for Amortized cost Others Total LIABILITIES Trading Due to Banks - 954, ,849 Derivative Financial Instruments 303, ,230 Due to other Customers - 170,094, ,094,950 Debt Securities issued and other borrowed funds - 48,444,968-48,444,968 Subordinated Term debts - 20,248,531-20,248,531 Total Financial Liabilities 303, ,743, ,046,527 Current Tax Liabilities , ,619 Deferred Tax , ,745 Other liabilities - - 5,644,033 5,644,033 Dividends payable ,574 46,574 Total liabilities 303, ,743,297 7,271, ,318,498 MEASUREMENT OF FINANCIAL INSTRUMENTS AS AT 30 JUNE GROUP (LKR'000) Held for Held to Maturity Loans and Available for Others Total ASSETS Trading Receivables Sale Held for sale Cash and cash equivalents - - 7,667, ,667,799 Balances with Central Bank - - 7,147, ,147,163 Placements with banks - - 7,788, ,788,743 Derivative Financial Instruments 1,804, ,804,887 Financial Assets - Held for trading 9,787, ,787,497 Loans and Receivables to banks , ,755 Loans and Receivables to other customers ,273, ,273,652 Financial Investments - Loans and receivables ,376, ,376,976 Financial Investments - Available for sale ,100, ,100,925 Financial Investments - Held to maturity - 8,154, ,154,127 Total Financial Assets 11,592,383 8,154, ,450,087 21,100, ,297,521 Investments -Held for sale ,302 33,302 Investments in associate companies , ,801 Investment Property ,545,693-1,545,693 Intangible assets , ,295 Property, plant & equipment ,208,437-2,208,437 Other assets ,619,118-1,619,118 Total assets 11,592,383 8,154, ,450,087 21,100,925 6,510,344 33, ,841,167 Held for Amortized cost Others Total LIABILITIES Trading Due to Banks - 954, ,849 Derivative Financial Instruments 303, ,230 Due to other Customers - 169,721, ,721,436 Debt Securities issued and other borrowed funds - 48,414,969-48,414,969 Subordinated Term debts - 20,248,531-20,248,531 Total Financial Liabilities 303, ,339, ,643,013 Current Tax Liabilities , ,547 Deferred Tax , ,299 Other liabilities - - 5,957,526 5,957,526 Dividends payable ,574 46,574 Total liabilities 303, ,339,784 7,585, ,228,957 NATIONAL DEVELOPMENT BANK PLC 7

12 MEASUREMENT OF FINANCIAL INSTRUMENTS AS AT 31 DECEMBER BANK (LKR'000) Held for Held to Maturity Loans and Available for Others Held for sale Total ASSETS Trading Receivables Sale Cash and cash equivalents - - 3,104, ,104,391 Balances with Central Bank - - 6,740, ,740,590 Placements with banks - - 2,721, ,721,891 Derivative Financial Instruments 1,903, ,903,781 Financial Assets - Held for trading 2,785, ,785,277 Loans and Receivables to banks , ,144 Loans and Receivables to other customers ,175, ,175,203 Financial Investments - Loans and receivables ,302, ,302,428 Financial Investments - Available for sale ,060, ,060,302 Financial Investments - Held to maturity - 8,970, ,970,963 Other Financial Assets , ,450 Total Financial Assets 4,689,058 8,970, ,410,097 17,060, ,130,420 Investments -Held for sale ,525 18,525 Investments in subsidiary companies ,000,290-2,000,290 Intangible assets , ,132 Property, plant & equipment ,927,496-1,927,496 Other assets ,399,283-1,399,283 Total assets 4,689,058 8,970, ,410,097 17,060,302 5,580,200 18, ,729,146 Held for Amortized cost Others Total LIABILITIES Trading Due to Banks - 7,029,342-7,029,342 Derivative Financial Instruments 663, ,186 Due to other Customers - 151,823, ,823,715 Debt Securities issued and other borrowed funds - 61,955,460-61,955,460 Subordinated Term debts - 11,149,439-11,149,439 Other Financial Liabilities - 2,423,677-2,423,677 Total Financial Liabilities 663, ,381, ,044,820 Current Tax Liabilities , ,687 Deferred Tax , ,467 Other liabilities - - 3,948,552 3,948,552 Dividends payable ,429 51,429 Total liabilities 663, ,381,633 5,446, ,490,954 MEASUREMENT OF FINANCIAL INSTRUMENTS AS AT 31 DECEMBER GROUP (LKR'000) Held for Held to Maturity Loans and Available for Others Total ASSETS Trading Receivables Sale Held for sale Cash and cash equivalents - - 3,274, ,274,036 Balances with Central Bank - - 6,740, ,740,590 Placements with banks - - 2,721, ,721,891 Derivative Financial Instruments 1,903, ,903,781 Financial Assets - Held for trading 6,028, ,028,558 Loans and Receivables to banks , ,144 Loans and Receivables to other customers ,235, ,235,906 Financial Investments - Loans and receivables ,683, ,683,476 Financial Investments - Available for sale ,057, ,057,852 Financial Investments - Held to maturity - 10,167, ,167,325 Other Financial Assets , ,450 Total Financial Assets 7,932,339 10,167, ,021,493 18,057, ,179,009 Investments -Held for sale ,301 33,301 Investment Property ,545,693-1,545,693 Intangible assets , ,070 Property, plant & equipment ,252,645-2,252,645 Other assets ,821,887-1,821,887 Total assets 7,932,339 10,167, ,021,493 18,057,852 5,917,295 33, ,129,605 Held for Amortized cost Others Total LIABILITIES Trading Due to Banks - 7,029,342-7,029,342 Derivative Financial Instruments 663, ,186 Due to other Customers - 151,485, ,485,201 Debt Securities issued and other borrowed funds - 61,925,802-61,925,802 Subordinated Term debts - 11,149,439-11,149,439 Other Financial Liabilities - 2,423,677-2,423,677 Total Financial Liabilities 663, ,013, ,676,647 Current Tax Liabilities , ,220 Deferred Tax , ,935 Other liabilities - - 4,186,957 4,186,957 Dividends payable ,429 51,429 Total liabilities 663, ,013,462 5,654, ,331,186 NATIONAL DEVELOPMENT BANK PLC 8

13 Notes to the Financial Statements 1. The figures are extracted from the unaudited financial statements. 2. The accounting policies and methods of computation are consistent with those followed during the previous financial year. 3. The financial statements of the Bank and the Group have been prepared based on the accounting policies and methods applied for the year ended 31 December 2014 and comply with Sri Lanka Accounting Standard 34- "Interim Financial Reporting". Previous year's figures and phrases have been re- arranged wherever necessary to conform to current year's presentation. 4. NDB Capital Holdings PLC entered into a shareholders agreement with NDB Zephyr Partners Ltd on 15 December 2014 to invest LKR mn in 60% ordinary shares and 60% redeemable preference shares in NDB Zephyr Partners Ltd, the Management Company based in Mauritius, which manages Sri Lanka's largest country dedicated private equity fund. Accordingly, the equity investment took place on 2 January The Boards of Directors of DFCC Bank PLC (DFCC) and National Development Bank PLC (NDB) announced that DFCC, DFCC Vardhana Bank PLC (DVB) and NDB have jointly agreed to terminate the Memorandum Of Understanding entered into by and amongst the said parties on the 24 March 2014 (MOU), relating to the intended amalgamation of DFCC, DVB and NDB, with effect from 11 May There have been no other events that require adjustment to the Financial Statements or disclosure in the Financial Statements that has occurred subsequent to the date of the Statement of the Financial Position of the Bank and the Group. NATIONAL DEVELOPMENT BANK PLC 9

14 Notes to the Financial Statements 7. ADDITIONAL QUARTERLY DISCLOSURES PRESCRIBED BY CBSL AS PER CIRCULAR (02/17/900/0001/004) DATED 11 OCTOBER 2013 Bank Group a) Loans and Receivables to Other Customers Current Period Previous Period Current Period Previous Period As at As at As at As at 30/06/ /12/ /06/ /12/2014 LKR '000 LKR '000 LKR '000 LKR '000 Gross loans and receivables 186,457, ,189, ,491, ,250,109 (Less): Individual impairment 2,470,268 2,289,590 2,470,268 2,289,590 Collective impairment 2,747,657 2,724,613 2,747,657 2,724,613 Net loans and receivables 181,239, ,175, ,273, ,235,906 Bank Group As at As at As at As at b) Gross Loans and Receivables to Other Customers - By product 30/06/ /12/ /06/ /12/2014 LKR '000 LKR '000 LKR '000 LKR '000 By product-domestic Currency Term loans 42,041,209 39,723,174 42,041,210 39,723,696 Medium and short term loans 21,977,507 23,919,879 21,977,507 23,919,879 Overdrafts 22,012,759 23,564,342 21,993,715 23,547,878 Trade Finance 10,629,122 9,881,392 10,629,122 9,881,392 Consumer loans 21,098,593 18,934,195 21,098,593 18,934,195 Lease rentals receivable 11,961,980 8,879,288 11,961,980 8,879,288 Hire Purchase 2,234,536 2,733,250 2,234,536 2,733,250 Housing loans 7,010,184 6,403,174 7,010,184 6,403,174 Pawning 253, , , ,594 Staff loans 1,118,387 1,052,993 1,171,209 1,129,638 Islamic Banking facilities 115, , , ,782 Sub total 140,453, ,682, ,487, ,742,768 By product-foreign Currency Overdrafts 637, , , ,569 Medium and short term loans 23,638,677 19,342,008 23,638,677 19,342,008 Trade Finance 20,887,583 24,296,531 20,887,583 24,296,531 Islamic Banking facilities 840, , , ,233 Sub total 46,004,200 44,507,341 46,004,200 44,507,341 Total 186,457, ,189, ,491, ,250,108 c) Movements in Individual and Collective Impairment during the period for Loans and Receivables to Other Customers Bank Group As at As at As at As at 30/06/ /12/ /06/ /12/2014 LKR '000 LKR '000 LKR '000 LKR '000 Individual impairment Opening balance at 01st January 2,289,588 1,828,065 2,289,588 1,828,065 Charge/(Write back) to Statement of Profit or Loss 175, , , ,432 Write-off during the period (351,705) - (351,705) - Other movements 357, , , ,093 Closing balance 2,470,269 2,289,590 2,470,269 2,289,590 Collective impairment Opening balance at 01st January 2,724,616 2,359,407 2,724,616 2,359,407 Charge/(Write back) to Statement of Profit or Loss 23, ,276 23, ,276 Write-off during the Period - (22,070) - (22,070) Closing balance 2,747,657 2,724,613 2,747,657 2,724,613 Total impairment 5,217,926 5,014,203 5,217,926 5,014,203 Bank Group d) Due to Other Customers - By product As at As at As at As at 30/06/ /12/ /06/ /12/2014 LKR '000 LKR '000 LKR '000 LKR '000 By product-domestic Currency Demand deposits 9,023,641 10,073,086 8,650,127 10,035,567 Savings deposits 19,604,058 18,291,268 19,604,058 18,291,268 Time deposits 91,062,621 86,689,126 91,062,621 86,388,131 Other deposits 207, , , ,081 Sub total 119,898, ,263, ,524, ,925,047 By product- Foreign Currency Demand deposits 2,472,102 2,218,739 2,472,102 2,218,739 Savings deposits 8,393,428 5,765,375 8,393,428 5,765,375 Time deposits 39,243,531 28,477,953 39,243,531 28,477,953 Other deposits 87,819 98,087 87,819 98,087 Sub total 50,196,880 36,560,154 50,196,880 36,560,154 Total 170,094, ,823, ,721, ,485,201 NATIONAL DEVELOPMENT BANK PLC 10

15 BANK GROUP Selected Performance Indicators (As per regulatory Reporting) As at As at As at As at 30/06/ /12/ /06/ /12/2014 Regulated Capital Adequacy Core Capital (Tier 1 Capital) (LKR mn) 20,446 19,888 26,966 26,952 Total Capital Base (LKR mn) 29,674 28,932 36,901 36,611 Core Capital adequacy Ratio -Core Capital as a % of Risk -weighted Assets (Minimum Requirement, 5%) Total Capital Adequacy Ratio -Total Capital as a % of (Tier 1 & 2 (%)) Risk -weighted Assets (Minimum Requirment,10% ) Asset Quality Gross Non-performing Advances Ratio (%) Net Non-performing Advances Ratio (%) Profitability Earnings Per Share (LKR)- (annualised ) Return on Average Shareholders' Funds (%) Return on Average Assets (%) Net interest margin (%) Debt Security - Related Ratios Interest Cover (Times) Debt to Equity (Times) Regulatory Liquidity Statutory liquid assets- LKR mn 56,286 56,650 56,286 56,650 Statutory liquid assets ratio (%) Domestic Banking Unit Foreign Currency Banking Unit Certification: We hereby certify that the above financial statements are in compliance with the requirements of the Companies Act No. 07 of (Sgd.) Dhanan Senathirajah Vice President- Finance & Planning (Sgd.) Faizan Ozman Group Chief Financial Officer We the undersigned, being the Chairman and the Chief Executive Officer of National Development Bank PLC certify jointly that: (a) The above statements have been prepared in compliance with the format and definitions prescribed by the Central Bank of Sri Lanka. (b) The information contained in these statements have been extracted from unaudited financial statements of the Bank. (Sgd.) N G Wickremeratne Chairman (Sgd.) R.Theagarajah Chief Executive Officer 13 August 2015 NATIONAL DEVELOPMENT BANK PLC 11

16 SHARE INFORMATION SHARE PRICE As at 30/06/ /12/2014 Number of shares 165,167, ,093,922 Last traded price (LKR) For the quarter ended 30/06/ /12/2014 Highest price per share (LKR) Lowest price per share (LKR) TOP 20 LARGEST SHARE HOLDERS OF NATIONAL DEVELOPMENT BANK PLC AS AT NAME NO OF SHARES % 1 BANK OF CEYLON NO. 1 ACCOUNT 16,371, EMPLOYEES PROVIDENT FUND 16,010, SRI LANKA INSURANCE CORPORATION LIMITED - GENERAL FUND 9,388, HSBC INTL NOM LTD - SNFE-NTASIAN DISCOVERY MASTER FUND 8,973, DR. S YADDEHIGE 8,669, SRI LANKA INSURANCE CORPORATION LIMITED - LIFE FUND 7,805, HSBC INTL NOM LTD-BPSS LUX-ABERDEEN GLOBAL ASIA PACIFIC EQUITY FUND 5,715, EMPLOYEES TRUST FUND BOARD 5,303, MR. R S CAPTAIN 5,270, BNY-CF RUFFER INVESTMENT FUNDS: CF RUFFER PACIFIC FUND 4,850, HSBC INTL NOM LTD BP2S LONDON-ABERDEEN ASIA PACIFIC EQUITY FUND 4,294, HATTON NATIONAL BANK PLC A/C NO 1 4,282, HSBC INTERNATIONAL NOMINEES LIMITED-MSNY-BAY POND PARTNERS L.P. 3,647, ASIAN ALLIANCE INSURANCE PLC ACCOUNT NUMBER 03/ LIFE SHAREHOLDERS FUND 3,450, MR. A K PATHIRAGE 2,970, ASIAN ALLIANCE INSURANCE PLC - GENERAL FUND ACCOUNT NUMBER 01 2,540, HSBC INTL NOM LTD-BBH-MATTHEWS EMERGING ASIA FUND 2,515, ASIRI HOSPITAL HOLDINGS PLC 2,411, ASIAN ALLIANCE INSURANCE PLC A/C 02 (LIFE FUND) 2,159, DFCC BANK PLC A/C 1 2,000, PUBLIC HOLDING PERCENTAGE As at 30/06/2015 Public holding percentage 90.24% Number Of Public Shareholders 7,410 DIRECTORS INTEREST IN SHARES OF NDB AS AT NAME NO OF SHARES N G WICKREMERATNE (CHAIRMAN) - A K PATHIRAGE 3,993,000* R THEAGARAJAH (CEO) 126 T L F JAYASEKARA - K FERNANDO - D S P WIKRAMANAYAKE - I SUGATHADASA - D M A HARASGAMA - D M R PHILLIPS - K D W RATNAYAKA - * Includes shares held in slash account NATIONAL DEVELOPMENT BANK PLC 12

17 INFORMATION ON DEBENTURES- BANK Type of Debenture CSE Interest payable Balance as at Market Value Interest Rate Interest rate Other ratios as at last trade Listing frequency 30 June 2015 Highest Lowest Quarter end Coupon Rate Effective Annual of comparable Interest Yield Yield To Maturity LKR mn LKR LKR LKR % Yield % Govt. Security % % % Fixed rate - Debenture June 2015 A - Jun 2015/Jun 2020 Listed Annually 7,000 Not traded during the quarter % Not traded during the quarter B - Jun 2015/Jun 2020 Listed Payable on date of redemption 1,914 Not traded during the quarter 9.4 annual compounding on the Issue Price of Rs % Not traded during the quarter Fixed rate - Debenture December 2013 A - Dec 2013/Dec 2018 Listed Semi annually 1,243 Not traded during the quarter % Not traded during the quarter B - Dec 2013/Dec 2018 Listed Annually 1, % C - Dec 2013/Dec 2023 Listed Annually 3,638 Not traded during the quarter % D - Dec 2013/Dec 2025 Listed Annually 3,590 Not traded during the quarter % Not traded during the quarter Not traded during the quarter Floating Rate Unlisted Quarterly (3 month TB rate (gross)+1% p.a.) Total Debentures 19,314 * Three months Treasury Bill rate before deducting 10% Withholding tax as published by the Central Bank of Sri Lanka has been used. NATIONAL DEVELOPMENT BANK PLC 13